Nonprofit organizations from Indian tribes to church ministries struggle with accounting issues that others outside the industry might never understand. They must manage grants, track donors and determine whether the amount allocated for certain campaigns is going to put money back in their coffers.
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Serenic is one of a handful of vendors that creates accounting software specifically designed to address these needs. The Lakewood, Colo.-based company already has roughly 250 customers in this sector, but is looking to expand in several states including California, Texas and the Colorado Rockies and also to stretch beyond North America to the United Kingdom, central Europe and Asia, with support from a growing channel network. About 30 resellers currently sell the company's products, accounting for about 40 roughly percent of its total revenue. But Serenic hopes to switch that to 60 percent channel/40 percent direct sales by February 2008.
Navigator is based on Microsoft Dynamics NAV (formerly Navision), which allowed executives to tap into Microsoft's existing channel when the company first launched its reseller program in October 2000, according to Chris Stevenson, vice president of sales and alliances for Serenic.
"The strength of the product comes by the virtue of the fact that it's Navision-based. It's technology that not-for-profit and government (organizations) aren't used to seeing," he says. "They've been living with less-than-great (ERP) products and they see Dynamics NAV and it blows them away. We've incorporated grant management, budget controls, advanced allocations and other vertical extensions (to) advance NAV for this space."
Stevenson and Serenic CEO Jay Malik previously worked with software companies Epicor (then called Platinum Software) and American Fundware (whose product line is now owned by Kintera), from which they were able to lure other resellers.
Dynamic Duo In January, they again piggybacked on Microsoft, entering into a reselling relationship with Tectura, the largest Dynamics VAR with an estimated $230 million in revenue for 2006 and roughly 1,800 employees. Tectura's main headquarters are in Redwood City, Calif., but business is evenly split between the United States, EMEA (Europe, the Middle East and Asia) and Asia Pacific, according to Katherine Nohr, Dynamics NAV practice lead for Tectura.
"Tectura has a worldwide presence. It's a legend within the Navision community," Stevenson says. "For us that not only will expand our footprint as far as our presence almost immediately, but it deepens our knowledge and skill set around the product."
Both companies wish to target the global humanitarian market.
Although Tectura has several partnerships with businesses producing Microsoft's GP line of products (formerly Great Plains), it has very few reselling relationships with companies producing Dynamic NAV products because it has so many of its own. Serenic is one of only three. The strategy behind these relationships is a vertical one. Tectura's products mostly aim at the manufacturing and professional services industry, while Serenic's taps the nonprofit and government sectors. Other NAV partners include Landsteiner in the retail industry and Pebblestone in the fashion sector.
"We think it's a market that's underserved on a global basis," Nohr says of the nonprofit sector. "Serenic is providing a really mature solution that is fully featured. They're taking advantage of the core NAV product. They're constantly enhancing the product based on client feedback. I look at the future and I can't imagine that you can't win."
Particularly noteworthy are Serenic DonorVision, Grant Management and Workflow, Nohr and other resellers say.
"Donor management has been really well-received," says Linda O'Neal, manager of the business consulting division of Finley & Cook CPAs, one of the first Serenic resellers and its No. 1 reseller in 2006 with 75 percent of the accounting firm's software division revenue coming from these sales-67 percent growth over last year.
The 60-year-old Shawnee, Okla.-based company works with many Native American tribes, but has a diversified client base in 27 states ranging from single users up to 200 users. As a result, Finley & Cook also resells Sage MIP Fund Accounting and AccuFund nonprofit accounting software.
O'Neal likes that Serenic offers two versions of its product: Business Essentials, which targets smaller organizations or departments and runs about $3,000 per user, and Advanced Management, which adds more complex grant management and workflow functionality for roughly $6,000 per user.
Average deployment costs for Business Essentials run from $20,000 to $40,000 and $40,000 to $100,000 for Advanced Management including add-on modules, according to Stevenson. Modules targeting specific categories within the nonprofit sector come in on the high end at about $30,000. These include MinistryView for religious organizations whose mission people are out in the field planting churches in remote third-world countries and need to track balances after expenditures and CommunityCare, which Serenic plans to introduce this summer to help manage mental health and other consumer-based organizations.
Maintenance costs 16 percent of suggested software retail price and resellers receive 15 percent of that, along with a range of .35 percent to 50 percent margin on product purchases.
Give and Take
Of course, the reseller has to give back as well.
It currently costs a new reseller $3,000 to join the Serenic Partner Program, which covers the cost of one person attending financial certification training, one person attending sales certification training and a 10-hour support plan.
Additional training for one person ranges from $900 for three days to $1,500 for five days and support from $750 for five hours to $2,600 for 20 hours.
Resellers must complete a minimum of two transactions per year to remain in the program, though no dollar amount is attached to that, according to Stevenson.
Once resellers have signed on, Serenic will work with them on everything from presales product demonstrations to targeted marketing campaigns and case studies to reach specific types of businesses.
"They give us collateral very focused on how the product works well for different industries, that helps us focus on different niches," says Peter Saul, director of professional services for Raleigh, N.C.-based Capital Business Solutions, which sells and implements ERP accounting systems including Serenic, Sage MIP Fund Accounting and Sage Fundraising 50 for roughly 400 nonprofit and government customers. It also implements the Financial Edge from Blackbaud, which has stopped using resellers.
About 40 percent of his company's revenue comes from Navigator sales.
Saul says that Serenic is "very good at eliminating traditional barriers to efficiency within an office, and may automate things the legacy systems don't have the ability of doing."
Saul also praises Serenic's channel program improvements, particularly its assigning a regional representative who focuses on providing sales and product assistance to the channel.
Another big change is Serenic's becoming authorized to distribute and support the "combined" Microsoft NAV and Navigator application instead of making resellers work with two separate companies, and therefore deal with two sets of margins, fees and certification requirements.
"There's a single publisher to work with. The structured program (is meant) to increase profitability," Stevenson explains. "Microsoft is a great engine, but we're a vertical product and Microsoft is not."
Since Serenic became an "embedded ISV" in September 2006, 90 percent of the channel made the transition to only dealing with one company. "We pride ourselves on rolling up our sleeves and working business opportunities with our partners," Stevenson says.
"One hundred percent would be great, but we didn't expect that."
Alexandra DeFelice is Associate Editor of Accounting Technology and can be reached at firstname.lastname@example.org.
Serenic Corp. Snapshot
HQ: Lakewood, Colo.
Founded: May 1999
Revenue: $6.46 million (estimated)
Number of resellers: 30
Products: Serenic Navigator, DonorVision
Web site: www.serenic.com